Commentary: The Carbon Tax Game Plan for 2017 (March, 2017)

by John McClaughryJohn McClaughry

Last year the intense efforts of the “Energy Independent Vermont” coalition to sell Vermonters on the merits of a carbon tax ran onto the rocks. But the friends of the carbon tax in the Vermont House and Senate aren’t giving up.

Three years ago the EIV coalition burst upon the scene. Spearheaded by the Vermont Public Interest Research Group (VPIRG), EIV included the usual organizations eager to defeat the Menace of Climate Change: the Conservation Law Foundation, Vermont Natural Resources Council, and Vermont Businesses for Social Responsibility.

Their plan was to persuade Vermonters to clamor for a new tax on gasoline, diesel fuel, natural gas, heating oil and propane, in order to prevent (somehow) a planetary climate catastrophe a hundred years down the road. When the tax reached its projected final level ($100/metric ton of carbon dioxide) in ten years, it would bring in about $500 million a year.

To buy support, the sponsors promised to return 90% of the annual revenues to lucky individuals, businesses, and community action organizations – while slyly explaining to legislators that “carbon tax revenue could of course be used for other purposes.”

The advocates thoughtfully carved out a 10% annual skim off – $50 million in the tenth year – to fund weatherization projects and especially the renewable energy projects so dear to VPIRG’s leading sponsors. These sponsors include wind and solar magnates David Blittersdorf and Matthew Rubin, who ponied up a sizable part of the $40,000 VPIRG spent for a study of the impact and benefits of saddling Vermonters with a carbon tax.

It is significant that the 30% upfront Federal investment tax credit for residential solar panel installations is scheduled to drop to zero in 2022. The state carbon tax revenues could then be used to keep the subsidized solar farm boom alive, to the delight of VPIRG’s larger donors.

The plan to sell the carbon tax to Vermonters began in 2015 with a bill backed by 27 House sponsors. The spring of 2016 saw a choreographed House hearing featuring only enthusiasts for the bill. But that wasn’t a good year to press for enactment – it was election year. The victory celebration was scheduled for 2017.

During these years VPIRG flooded the state with summer interns asking people if they supported putting a fee on “carbon pollution”.  The coalition hired a “campaign director” to sell the goods. The sponsoring organizations fielded at least 20 registered lobbyists in the State House.

But things started to go sour. The Ethan Allen Institute worked hard to explain to Vermonters just what they were being asked to buy into, and the unlikelihood that the dangled tax reductions would be honored for a decade by a legislature chronically facing huge budget gaps.

The Republican candidate for Governor firmly declared that he would veto a carbon tax. The Democratic candidate didn’t clearly endorse it, but offered her own less obvious plan to achieve the same goal. He won, and she lost.

Now, in 2017, the carbon tax crowd, obliged to battle on to justify their donors’ investments, face the problem of selling a product that most Vermonters clearly don’t want. “Carbon tax”, once so boldly promoted as the best way to put Vermont at the forefront of states battling the Menace of Climate Change, largely disappeared. The latest euphemisms are “social cost of carbon”, “fee on carbon pollution”, “cap and trade”, “greenhouse gas initiative”, and even “tax reform”. Don’t be fooled.

Faced with an unequivocal veto threat from Gov. Scott, the carbon tax coalition won’t try now to push through their bill to raise $2.6 billion in new taxes (over ten years, offset by promised tax reductions). Instead, they want taxpayers to pay $100,000 to have the Joint Fiscal Office conduct a study of “the fiscal impacts of adopting and implementing carbon pricing and cap and trade programs in Vermont” (H.394). One has to wonder why, after the coalition with much fanfare released its $40,000 REMI study three years ago, it now needs a new $100,000 study to cover the same ground.

The answer , of course, is that mandating a new study will keep the issue alive, and please whomever has been footing the bill for this three year old (and stalled) carbon tax campaign.

Almost certainly the carbon tax promoters will try to smuggle the language of the bill and the $100,000 spending authorization into the FY18 appropriations bill. If they succeed, Gov. Scott may well be stuck with it, since a Vermont governor does not have a line item veto (unfortunately).

Citizens who think the carbon tax plan, in whatever guise, will turn out badly for them and for the state, ought to ask their legislators to be sure to get a roll call vote on this study provision.

John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org)

 

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